The Jewish Agency for Israel’s Board of Governors will grapple with its most severe fiscal crisis to date at meetings scheduled to begin at the end of this week in Jerusalem.

Heated debate is certain as the board is called upon to slash coveted social service and educational programs to the tune of $110 million during the next two years.

These cuts mark the first phase of a dramatic five-year austerity and reform plan made necessary by yawning deficits caused in part by flat fund-raising campaigns overseas.

The Agency is the primary recipient of United Jewish Appeal funds targeted for overseas that are raised by local federations.

Even with the projected cuts, the Agency’s accumulated deficit is expected to top $100 million by the end of 1997.

Most vulnerable to the board’s chopping block as it meets through next week are long-term immigrant absorption programs and residential education for underprivileged Israelis in the Youth Aliyah program.

Agency leaders, meanwhile, have been meeting with Israeli government officials to try to secure their commitment to take over these and other responsibilities. But such government pledges were not expected by the time the board convenes.

To date, the government has conveyed to Agency leaders that it has already committed to a 1996 budget and that it would be difficult to assume new Agency responsibility in the short term.

But Jewish Agency Chairman Avraham Burg called that a “bargaining position.”

For now, the Agency plans to retain responsibility for the aliyah of the roughly 80,000 annual immigrants to Israel and for their short-term absorption. Aliyah and absorption have been among the Agency’s primary responsibilities.

And even though it is likely to cut Youth Aliyah programs for Israeli youth, the Agency will continue to fund Youth Aliyah programs for immigrants as well as for Jewish-Zionist education.

The cuts and the transfer of some responsibilities to the Israeli government form the centerpiece of a plan unveiled last month by Jewish Agency leaders to balance the strapped Jewish Agency budget by the year 2000.

The Agency, which operates with a roughly $500 million annual budget, is calling for $500 million in reductions over the next five years.

“We are facing monumental debt” and the need for “massive, massive cuts,” said Shoshana Cardin, president of the United Israel Appeal, which funnels money from the United Jewish Appeal to the Jewish Agency.

Burg has called this the Agency’s “moment of truth” and an “operation without an anesthetic.”

Indeed, emotions ran so deep when the plan was unveiled that some members of the executive broke down in tears, according to Burg.

The decisions made by Agency leaders at its meetings this month could begin to alter the face of the Jewish Agency.

A critical part of the new fiscal program is a plan for a $230 million increase to the Jewish Agency from the Diaspora fund-raising campaigns over the next five years.

But the call for a committed hike in campaign donations is likely to meet resistance from those who raise the money.

Federation campaigns are already strained by increased demands at home, reflected in shrinking overseas allocations from more than 50 percent in past years to a little more than 40 percent today.

The Jewish Agency’s board will be asked at the outset of its meetings to approve the plan for cuts and campaign increases, Burg said in a phone interview during a visit to New York this week.

But Burg, who in the past has called for guaranteed campaign funding to the Jewish Agency and has been rebuffed for it, appeared for the moment to be chastened.

He acknowledged such approval is only “emotionally binding.”

Nonetheless, he feels it is an essential component of the plan. “I don’t want to create the pain [of the cuts] without creating hope,” he said. “I don’t want to create a situation where the call of the prime minister is not responded to by the Board of Governors.”

Burg was referring to the highly publicized recent remarks by Prime Minister Yitzhak Rabin, who criticized Diaspora Jews for not contributing enough to the Israel-Diaspora partnership through the Jewish Agency.

Of the UJA-federations’ annual $720 million campaign – minus 5 percent in uncollected pledges – about $200 million, or two-thirds of its overseas allocation, goes to the Jewish Agency.

“It’s gornisht,” Burg said in a recent satellite broadcast to Diaspora fund- raisers about the fiscal crisis, using the Yiddish word for “nothing.” He added, “It’s not fair.”

For Charles “Corky” Goodman, chairman of the Agency’s Board of Governors, the budget crisis jeopardizes the very relevancy of the Jewish Agency, and with it the partnership between Israel and the Diaspora.

The Agency “is our contact with the Israeli people, the Israeli government, and in order for it to remain relevant, it has to be fiscally sound,” Goodman said in the satellite broadcast with Burg.

“Even the prime minister is questioning our relevance,” he said. “We have to perform.”

But Goodman is wary of coming down too hard on the fund-raisers.

“I don’t believe it’s my place to tell them what to do,” he said in a phone interview this week. “They are trying their best to fulfill their commitments.”

Goodman places the responsibility for the declining dollars to the Agency on its leaders, who he says have failed to convey the necessity of the service they provide.

“What has not been communicated is the absolute need and importance of these programs and the responsibility of the Diaspora to support these programs,” he said.

The impact of past remarks by Economics Minister Yossi Beilin that Israel no longer needs Diaspora philanthropy also has hurt the campaign, Goodman said.

“I hope to seek a new covenant between the Jewish Agency and Israel that makes it clear Israel places importance on the help from Jews in the Diaspora,” he said.

But the ultimate solution, said Goodman, is to sell the Agency’s mission better and “increase the size of the overall pot.”

Cardin expects some conflict at the board meetings between what the Israelis will demand of the fund-raisers and what the fund-raisers will agree to deliver.

But she described such conflict as business as usual.

“For a number of years we have heard we are not sending our share,” she said, adding that there must be more sensitivity on the part of Israelis to the reactions of fund-raisers to “suggestions this is not a real partnership.”

“I don’t think there’s sufficient understanding by the Israelis of the concept or ideology of the voluntary [federation] campaign,” she said.

“Federations are autonomous,” she said, adding that they are laboring under serious strains imposed by federal cuts and consequent threats to the social “safety net” at home.

“This is no time for anyone to say `Thou shalt,'” she said. “It won’t work.”

In any event, national communal leaders are re-examining the campaign allocations process as part of a major ongoing effort to restructure the central Jewish fund-raising organizations – the UJA; the Council of Jewish Federations, the umbrella body for local federations; the UIA; and the American Jewish Joint Distribution Committee.

A plan under serious review calls for the establishment of a guaranteed floor of funds to Israel at current levels and a “good-faith commitment” by federations to allocate overseas 50 percent on a national basis of any campaign increase.